An Analysis of the Formation and Failure Rates of Minority-Owned Firms

Abstract

This article primarily investigates the applicability of principles of industrial organization to an understanding of the formation and failure process of minority-owned firms. Among these principles are that formation will be high (and failure low) when a firm is located in a high growth industry, a high growth geographic locale, and an industry with low capital intensity and low concentration. The article also evaluates whether some of the hypotheses from the minority literature, such as the impact of SBA loans to minorities, also contribute to an explanation of the formation and failure process.